Editor's Note: On June 20, the State Council's ‘Regulations on Tax-Related Information Reporting by Internet Platform Enterprises’ was announced and came into effect, providing a clear definition of ‘Internet platform enterprises’, ‘e-commerce platform operators’ and ‘other organisations providing network business premises, transaction aggregation, information dissemination and other profit-making services for network trading activities’. The ‘e-commerce platform operator’ and ‘other organisations providing network business premises, transaction aggregation, information dissemination and other for-profit services for network trading activities’ are included, especially the latter with a broader scope. However, some emerging businesses are still controversial as to whether they are ‘Internet platform enterprises’. On 30 June, the State Administration of Taxation (SAT) issued the Announcement on Matters Relating to the Reporting of Tax-Related Information by Internet Platform Enterprises (No. 15 of 2025) and the Announcement on Matters Relating to the Reporting of Tax-Related Information by Internet Platform Enterprises (No. 16 of 2025), and Announcement No. 15 explicitly lists seven types of enterprises as belonging to the scope of ‘Internet platform enterprises’. "The controversy has been settled. Among them, flexible labour platforms are listed. Circular No. 15 makes detailed provisions on the scope, content, time and manner of reporting tax-related information by Internet platform enterprises and the handling of failure to report in accordance with the regulations, while Circular No. 16 focuses on the scenarios of employees obtaining labour remuneration or service income from Internet platform enterprises, optimises the withholding and prepayment method of personal tax on income from labour remuneration, and refines the relevant provisions on the declaration of value-added tax (VAT) and surcharge on behalf of the employees. Against this background, flexible labour platforms are facing profound changes, and the industry may face a ‘reshuffle’.

First, the technical requirements and compliance costs have increased significantly, and the elimination of flexible labour platforms will be accelerated. 

Article 5 of the ‘Information Reporting Provisions’ proposes that Internet platform enterprises should report tax-related information through the Internet and other means in accordance with the data calibre and standards for tax-related information reporting stipulated by the competent tax authorities of the State Council. The tax authorities shall provide safe and reliable tax-related information reporting channels, actively use modern information technology, provide direct reporting, uploading and importing interface services, and do a good job of policy interpretation and question and answer consulting services. Article 6 stipulates that Internet platform enterprises shall verify the tax-related information of operators and practitioners within the platform.

Article 2 of Announcement No. 16 stipulates that Internet platform enterprises shall verify the identity information of practitioners in real names in accordance with the regulations; and obtain the written consent of practitioners and keep it for record before making VAT and additional tax declaration on behalf of practitioners.

Although literally Article 5 of the Provisions on Information Reporting requires the tax authorities to provide interface services, data calibre and standards, it also means that the Lingong platform needs to build the collection system of practitioners' identity information, transaction information, data storage system and so on. According to the second requirement of Announcement No. 16, the spiritual work platform also needs to build real-name verification system, electronic signature system and so on. These new requirements at the technical level are invisible thresholds for small platforms. It can be predicted that in the future, the Internet information service business licence, value-added telecommunications business licence, network security level protection level two certification and full-time compliance team or become a spiritual work ‘standard’, spiritual work platform winners and losers accelerate, the Internet attributes to strengthen the small-scale platforms due to the cost of compliance and forced to withdraw, pure invoicing of the depression! The platform has become a thing of the past!

Second, the platform enterprise income tax deduction voucher requirements are clear, the business authenticity proof standard is raised 

For the spiritual work platform's own tax compliance, the 16th announcement also puts forward a higher requirement. 16th announcement article 3 stipulates that, the Internet platform enterprise with personal income tax withholding declaration form, personal income tax tax vouchers, the Internet platform enterprise on behalf of the declaration form, the value-added tax and surtax tax vouchers as deduction vouchers. The labour remuneration paid to the practitioners shall be deducted accordingly before the enterprise income tax; and relevant information and vouchers shall be kept in accordance with the provisions of the tax laws and administrative regulations, including real-name verification records, business transaction details, settlement and payment records, and other materials capable of proving the authenticity of the business, for inspection and verification. If the Internet platform enterprise fails to keep the materials capable of proving the authenticity of its business in accordance with the regulations, the relevant vouchers obtained from its withholding declaration and proxy declaration shall not be used as the vouchers for deduction before enterprise income tax.

The above provisions regulate the pre-tax deduction of enterprise income tax for internet platform enterprises from both formal and substantive dimensions. Meanwhile, in combination with Article 7 of the Provisions on Information Reporting and Article 4 of Circular 15, which requires the provision of ‘tax-related information such as contract orders, transaction details, fund accounts, logistics and other information of operators and practitioners’, it is easier for the tax authorities to identify false transactions, false invoices and other behaviours, and it also puts forward a higher level of compliance and risk control requirements for the platforms of spiritual workers. The platform also puts forward higher requirements for its own compliance and risk control level.

A penalty and exemption clause pushes the Lingong platform to improve the tax compliance of operators and practitioners 

Article 6 of the Information Reporting Provisions stipulates that Internet platform enterprises shall verify the tax-related information of operators and practitioners on the platform, and shall be responsible for its truthfulness, accuracy and completeness. Article 10 stipulates that if an internet platform enterprise conceals, falsely reports or omits to report tax-related information, or if the tax-related information is untrue, inaccurate or incomplete due to the internet platform enterprise, the tax authorities shall order rectification within a certain period of time; if it fails to do so, it shall impose a fine of not less than 20,000 yuan but not more than 100,000 yuan; and in case of seriousness of the situation, it shall order the closure of the business and impose a fine of not less than 100,000 yuan but not more than 500,000 yuan.

Although the fine is not huge in terms of amount, it should be noted that the number of penalties is uncapped. If the systematic defects of the Lingong platform lead to the provision of untrue, inaccurate and incomplete tax-related information, it will be repeatedly punished by the tax authorities, and the superimposed amount may reach ‘sky-high’.

At the same time, the new regulations also give the Internet platform exemption clauses. First of all, Article 3 of Announcement No. 15 stipulates that if an Internet platform enterprise finds that there is an error in the reporting of tax-related information, it should, within 30 days from the date of discovery, make a corrective report to the competent tax authorities, i.e., a self-corrective mechanism has been established. At the same time, the second half of Article 6 of the Provisions on Information Reporting also stipulates that Internet platform enterprises will not be held responsible for the untruthfulness, inaccuracy or incompleteness of tax-related information due to the faults of the operators or practitioners within the platform. This means that the platform needs to have sufficient technical level to find out the ‘fault’ of the operators or practitioners on the platform and prove that the platform itself is not ‘at fault’ in order to be exempted from the corresponding responsibility. These penalties and exemption clauses force the platform to improve the tax compliance of operators and practitioners through technical means.

Fourth, ‘changing the nature of income’ may become the focus of tax inspections, and some platforms are facing transformation. 

During the period when flexible labour is highly active, there are some platforms that obtain a large number of customers through publicising ‘tax financing’, in which they use the policy of setting up a self-employed household for natural persons and obtaining a certain tax approval for the invoicing place, so that they can obtain the approval policy for individual tax. In the period when flexible employment was highly active, some platforms gained a large number of customers through the promotion of ‘Tax Chip’, which used the policy of setting up a self-employed account for a natural person and obtaining approval for the personal tax of a certain invoicing place to realise ‘low-cost’ withdrawals. It is true that in the past, individuals in the spiritual work platform to take the task to get money, this kind of income belongs to the ‘remuneration for labour’ or ‘business income’, flexible employment platform through a variety of packaging means and occupy the right to speak.

With the outbreak of tax evasion cases of some high-income stars, netizens and anchors, the tax authorities characterise such ‘tax chips’ as ‘illegal transformation of the nature of income’ and ‘illegal enjoyment of approved policies’. ". With the implementation of the new regulations, the tax authorities have access to detailed tax-related information of practitioners, and the tax authorities have taken over the right to say how to judge the nature of such income. With the implementation of the State Administration of Taxation Announcement No. 15 and No. 16, the issue of ‘transforming the nature of income’ of the spiritual labour platform will become the focus of tax inspections, and some platforms are facing transformation.

Summary: The State Council's ‘Provisions on Tax-Related Information Reporting by Internet Platform Enterprises’ and State Administration of Taxation Circulars No. 15 and No. 16 have far-reaching impacts on spiritual platforms, and it is learnt that some platforms have already suspended their new business, stepped up their policy research and communicated with the competent tax authorities. The author believes that the policy guidelines are crucial for the standardised development of the entire spiritual industry, so as to avoid ‘bad money driving out good money’ in the industry. As stated in the drafting instructions of the Provisions on Tax-Related Information Reporting of Internet Platform Enterprises (Draft for Public Comments), ‘the tax burden of more than 90% of platform operators and the vast majority of platform employees will not be increased due to the reporting of information, and the tax burden of high-income earners with false declarations, tax evasion and other non-compliant behaviours will return to the normal level, which is the rightful meaning of fairness in taxation’. This is the proper meaning of tax fairness."